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| SRP Board Approves 3.9% Rate Hike |
SRP Board Approves 3.9% Rate Hike
Salt River Project's board of directors voted unanimously Thursday for a $100 million annual rate increase with a small concession to solar developers and more credits for low-income customers. The increase will average 3.9 percent, or about $6 a month for the average residential customer, starting in November. "That 3.9 percent really is tied to SRP's long-term health," said Dean Duncan, treasurer and director of financial services. "That is the basis for strong customer service. That is the basis for (electric) reliability." SRP was lobbied hard by the solar industry and advocates for the poor to make other changes to its rate plans. In response, the utility will increase the size of solar arrays allowed in its net-metering program, which credits solar owners for the power they produce. SRP also will provide an additional $24 a year to about 43,000 low-income customers, which will be applied to their summer bills. Low-income customers currently get $17 a month in credits to their bills. The change will cost the utility a little more than $1million a year. SRP also will make a $400,000 contribution to the Arizona Community Action Association fund that helps low-income customers pay their bills when they fall behind. Another $100,000 will fund a study on educational programs to help those customers manage power use. To qualify for the low-income program, customers must earn 150 percent or less of the federal poverty level. That means an annual income of $34,572 or less for a family of four. The municipal water and power utility's managers made a revised proposal to the board members, who are elected by people who own property in SRP territory, and the vote was taken within two hours. Also among the changes is a $2 a month increase in the basic service charge, to $17 from $15, regardless of the amount of electricity customers use. SRP managers discussed that change because the utility already has among the highest-priced basic service charges in the region. The Sacramento utility will soon be charging $20, but the Los Angeles utility charges $10, and Seattle's charges $3.58, SRP officials said. "There are some other public power utilities that are moving pretty aggressively," said John Tucker, manager of pricing design for SRP. Solar developers wanted SRP to allow much larger solar arrays allowed into the net-metering program than the 200 kilowatts SRP originally proposed. While some lobbied for as much as 2 megawatts, or 2,000 kilowatts, the utility leaders agreed to let systems as large as 300 kilowatts participate. Officials said that change will allow more schools and large customers to participate. Solar-industry advocates also contested SRP's proposal to take the renewable-energy credits from those solar arrays. SRP buys the so-called RECs from customers with the incentive it pays those who install solar arrays. Eventually SRP won't pay an incentive because solar prices are falling and so are the incentives. Officials approved a change that says when the incentives reach zero, a new policy will kick in where SRP will still receive the RECs. SRP counts the RECs toward its goal of generating a certain amount of power from renewable sources. Solar advocates said taking the RECs from customers without compensation is unfair, because the RECs can be sold separately from the power produced, and those customers potentially could sell their RECs to other utilities or businesses rather than sign them over to SRP for free. "You are going to be taking RECs from your customers without paying for them," former Arizona Energy Office Director Amanda Ormond told the board. Ormond now works as a consultant. "No other utility in the country is taking RECs without compensation," she said. "That alone should give you pause." Other solar-industry representatives supported Ormond, and asked whether such a policy would be legal. That sent SRP managers in the audience scrambling to pass notes to the speakers representing the utility at the front of the public meeting. "We believe we have a good proposal," Chief Financial Executive Aidan McSheffrey said. The Arizona Center for Law in the Public Interest, which frequently challenges SRP rate increases, suggested that because SRP had a profit of $201 million in the first quarter of this fiscal year, $50 million higher than projected, that the utility did not need the rate increase. While technically a non-profit, SRP strives to generate revenue greater than its debt and operating expenses. This profit is redirected back into the utility's operations, and also used to subsidize the cost of water for landowners in SRP territory. The utility also had higher than expected profits in August because of the hot weather, SRP officials said before the rate hike was approved. SRP managers also responded to criticism that their prices were higher than competitors, saying the average residential customer rates are about 16 percent lower per year than at neighboring Arizona Public Service Co. Reach the reporter at
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. - printed 9/27/2012 The Republic/azcentral.com |
